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Tesla’s Master Plan 3: Details Are Vague, Leadership Is Clear
Tesla’s investor day ended up being mostly about illuminating the wide lead Tesla has on other car makers. The much-anticipated topic of a Master Plan 3 outline left me with more questions than answers. We do know it will include at least two new models that are, at the earliest, a couple of years away. Big picture; investor day gave me confidence Tesla remains comfortably ahead of other automakers and has a plan for how to significantly ramp deliveries.

Key Takeaways

The next-gen platform includes at least two new models, likely two plus years away.
Tesla's leadership is clear, obsessing over details while other car makers are just getting started.
Giga Mexico will focus on next-gen vehicles.
Other updates around demand, China, and HVAC.

Next-gen models coming, but details are vague

Going into the event, I was expecting the Master Pan 3 to be anchored around a new $30k model that was a few years away from production. As it turns out, the company gave no details about the timing of production for the new vehicles, price, design, and end customer (fleets or consumers). We did learn the platform will include a series of models, by my math as few as two and as many as four. Long-term, the company will have about 10 models (S, X, 3, Y, Semi, Cybertruck, and four yet to be announced).

Reading between the lines, these new models will be central to Tesla hitting its goal of 20m vehicles a year, and may account for about 65% of those deliveries. Based on the below slide that framed in expected deliveries by model, I’m now expecting one model, I’ll call it Model A, will be a $30K car, and my guess is the other will be a bigger SUV or a van (Elon is a fan of the Mercedes Sprinter).  I’m making a big jump with the bigger SUV/Van prediction given it’s only based on the covered images below.

It’s worth noting that the company got specific questions about details for next-gen vehicles, and Musk responded by saying they will decline to answer anything on the topic and will have a proper event when the time is right.

Source: Tesla


Tesla remains the leader in EVs

Most of the investor day was dedicated to giving details about all of the things needed to make a world-class EV. These include integrating design with manufacturing, software, manufacturing AI, batteries, storage, and sourcing, along with the company’s charging network. Some takeaways include:

  • A new powertrain is coming that is cheaper and easier to scale; two of the biggest variables to making a cheaper car profitable. The timing is unclear and we don’t know which models will get the upgrade.
  • A lithium refinery in Texas is likely to be commissioned by end of this year, another example of how fast Tesla goes from plan to production.
  • Supercharger network wait times have been a growing user criticism. The company claims wait times are down given utilization is up. My question; what happens to wait times once the network is opened up to other EV makers?
  • Tesla flexed its feature muscles that other car makers don’t have including dynamic suspension which knows when you are going to hit a rough patch of road.
  • They also outlined the nitty-gritty of improving design, including changing voltage in the vehicle and simplifying the wire harness.

Giga Mexico will be in Monterrey

Tesla announced its 5th factory, Giga Mexico, which will be the first factory to build the next generation vehicles. It sounds like building will start within a couple of years, meaning the first deliveries are more likely 3 years away. Based on the company’s goal to continue to tightly integrate vehicle design with the manufacturing process, I expect this factory will be Tesla’s most efficient.


Other notable takeaways

Demand is healthy. Musk said small changes in price are having a “very big impact on demand.” A positive sign for order book in March and June. This gives some confidence to Elon’s comments in January that they can hit 2m deliveries this year, up 50% yy, compared to up 40% in 2022. The company announced it has made its 4 millionth vehicle, suggesting it is on track to produce about 450k vehicles this quarter, in line with expectations. As of December 2022, Tesla had delivered 3.65m vehicles life to date.

Reiterated long-term goal of 20m vehicles a year. That goal is a long way away from the 1.3 million vehicles Tesla delivered in 2022. This translates to about 24% global auto market share. Today, Toyota and VW each have about 12% share. While it’s such a big goal that investors will dismiss it, I believe Tesla eventually can come close if not achieve that lofty goal based on the state of competition at scale in the broader EV market.

Geopolitical risk. The geopolitical risk question related to China came up, and the company said they don’t know how it plays out, adding that the China business is going well. I believe this (not competition) is the biggest risk to Tesla over the next five years.

Optimus update. Elon pushed that Tesla is the “most advanced real-world AI” and showed video renderings of Optimus doing tasks. My view is Optimus is so far out that it’s not worth spending much time on it.

The topic of HVAC resurfaces. Musk says they may make a heat pump for the home. The heat pump is a major hurdle to making a solar home work. Today, the most cost-efficient way is to heat with natural gas.

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